Ontario Teachers Leads $360M Investment in Data Centre Developer Princeton Digital

Asia’s data centres continued to win over investors this week as one of Canada’s largest pension fund managers agreed to lead a $360 million financing round for Princeton Digital Group.

The Ontario Teachers’ Pension Plan is joining Warburg Pincus, which first invested in Singapore-based PDG in 2017, in the new funding commitment, according to a joint statement today by the three companies today.

“We are delighted to have Ontario Teachers as an investor in PDG,” said Rangu Salgame, co-founder, chairman and CEO of the bit barn specialist. “Their track record of long-term investments combined with deep data center experience makes them a great partner as we continue to scale our business.”

The fresh cash for PDG comes after Salgame led the company in establishing a portfolio of 18 data centres in operation or under development since founding the company three years ago. The deal also follows less than three weeks since Bain Capital-backed data centre operator Chindata raised $540 million in a NASDAQ IPO.

A Team with Traction

Ontario Teachers, which had C$204.7 billion ($155.9 billion) in net assets as of 30 June 2020, framed the investment as an opportunity to latch onto the rapid digitisation of Asian economies, as well as to benefit from working with a successful player in the sector.

“We are excited to invest in PDG alongside Warburg Pincus,” said Ben Chan, regional managing director for Asia Pacific at Ontario Teachers. “We see data centres as a compelling investment opportunity given their essential role in the rapid digitalization and growth of data occurring in Asia and around the world.”

Chan also expressed confidence in PDG’s management and its expansion strategy, which includes acquiring smaller rivals and carving out facilities from the holdings of telecom operators, as well as undertaking its own greenfield and brownfield development projects.

With projects in 12 cities across India, Indonesia, Singapore and China, PDG has built 350 megawatts of power capacity spread across both core and high-growth markets in the region.

“Since backing the founders in PDG’s formative days, we have been impressed with their ability to build a leading pan-Asian presence within a short period of time,” said Warburg Pincus managing director and head of real estate for China Ellen Ng. “We see a tremendous opportunity for PDG to continue to grow across the largest and fastest growing markets in Asia.”

APAC Data Centres Take Off

Asia Pacific is expected to become the largest data centre market in the world next year and is predicted to account for 30 percent of the sector’s revenue globally by 2023, according to numbers supplied by PDG.

That market potential has attracted a growing number of institutional investors to the sector despite its technical complexity and the impact of policy on developing new projects.

In addition to Chindata’s debut on the NASDAQ, which came just over one year after Bain Capital had fused a recent China acquisition with a set of two Malaysian data centres it had acquired previously, initiatives by Gaw Capital Partners and the UK’s Actis have announced major moves in recent months.

Just one year after agreeing to invest $180 million to acquire a majority stake in China-focused data centre Chayora, Actis last month expanded its strategy in the sector by establishing a $315 million Korean joint venture.

That September deal came just two weeks after Gaw Capital closed on $1.3 billion in financing for a China data centre fund, thanks to significant backing from the Abu Dhabi Investment Authority (ADIA).

Also in September, US private equity firm Stonepeak Infrastructure Partners announced a $1 billion data centre fund after joining with a group of former senior executives from server facility specialist Equinix to set up a new platform seed with a pair of Japan projects.